TRANSPORT

Competing with global giants

South African Transport and Logistics SMEs are a core component of the overall local industry. Should these SMEs not be globally competitive, there are two key risks that will result: global competitors will enter the local market and make local SME’s irrelevant – due to either price or quality of service or both; and the overall South African transport and logistics industry will suffer by losing a chunk of business to hubs and ports north of our borders.

This is according to Tony Willis, ICT Enterprise Architect at T-Systems in South Africa, a leading ICT outsourcing service provider. Willis, who has more than 26 years of experience in the global IT industry (in programming, business analysis, enterprise architecture, application and integration architectures, strategic planning, and IT management and IT service management systems), says technology is a key component when it comes to improving competitiveness of SMEs in the transport sector in South Africa -- especially in terms of predictability, visibility, enhanced communication, just-in-time information -– and providing value for money (as opposed to pure cheapest) services. Price competitiveness is also important (although there are some factors the SMEs have no control over, such as petrol prices) as is risk management and security (ensuring goods are not lost/stolen/tampered with).

“For many sub-Saharan countries, South Africa is often considered the ‘gateway’ to the African continent, and is currently in a strong position with regard to international shipping and trade -- both into and from Africa. However, there are a number of other ports in Africa, which are becoming increasingly competitive, introducing risk for local logistics providers that rely on international business. While South Africa’s infrastructure is good, there is always room for improvement, and as a country we cannot afford to rest on our laurels.”

Referring to the specific factors hampering transport and logistic SMEs from being more competitive, he says the current financial environment is definitely a factor –- as are the tighter margins that SMEs are forced to offer due to a wider range of international competitors they are having to deal with.

As the lead architect for an international Mobile Payment solution that is now in operation in more than 10 countries worldwide, and leading authority on service oriented architectures in Africa, Willis is one of the most knowledgeable and experienced experts in his field in South Africa.

“Uncertainty around the business case/return on investment in technology is also a hindering factor and in many cases, a business case is not an exact science. It requires a number of assumptions and projections. It is very difficult to convince boards and management to invest where there is uncertainty around the return on investment.

“Government could definitely assist by introducing tax incentives or other schemes to promote the investment of SMEs in certain key technologies that will enhance their effectiveness and the services they deliver to their target market,” he told Opportunity.

“There are a range of technology offerings that allow participation by SMEs at low cost of entry - and the wide variety of cloud-based offerings provide a near zero capital investment in the technology. Instead of investing significant capital expenditure in new technology, smaller businesses can pursue cloud-based/low-cost offerings in each of the technology areas of mobility, big data, security, social media and the Internet of Things. There is also a wealth of information available on the Internet with regard to ‘use cases’ and innovative uses of new technology. However, SMEs must do their homework on where particular technologies can be used and how –- as well as actual benefits that have been achieved by other organisations around the world,” he advises.

Willis says government can also make a difference by incentivising SMEs’ investment in new technology -- and particularly technology that will significantly enhance competitiveness. “Government can also further encourage and support local business by reviewing current legislation and regulations.”

As to how competitiveness of SMEs in the transport sector in South Africa can help to transform the country’s bottom line, he says competitiveness of South African SMEs will attract more business into the country -- and the associated revenues and increase in profitability will benefit South Africa’s bottom line - improving GDP and profitability in the process. There is some potential for increasing the employment levels of the country in the process - although this may be marginal.

“If South Africa is able to leverage the advantages of improved supply chain visibility, the overall transport and logistics costs will be reduced, making the country more attractive to international suppliers and increase attraction value for foreign investment,” he says.

The technology evolution

Improving visibility throughout the supply chain and introducing “intelligent” technologies such as telematics, mobile, in-memory computing, big data and cloud technology, as part of smart logistics solutions are essential steps.

“Telematics systems are used to collect a wide variety of data that can enhance intelligence about the end to end logistics supply chain. Big data and business intelligence technologies allow this data to be combined, aggregated, modelled and queried in order to develop business intelligence (BI). In-memory computing technologies allow the intelligence to be derived at markedly faster speeds -- sometimes a thousand times faster than traditional disk-based BI systems. Cloud technologies allow for flexible scaling up and down of the underlying technology infrastructure (as and when required) that supports particularly the big data systems, lowering overall cost of ownership of technology infrastructure. And finally, mobile technologies allow for this information to be delivered in near real-time to the relevant users anywhere, on the device of their choice - and made available to all relevant stakeholders so that it can be integrated into manufacturing, retail and all other areas of the supply chain, allowing for optimisation and improved planning, scheduling and efficiency. This in turn enables decision-makers to become more proactive, using meaningful insight to drive improved logistics processes,” Willis says.

Supply chain

Enabling South Africa to become more competitive around its products and services in the global transport and logistics marketplace requires (among other areas) significant improvement to visibility of the supply chain utilising next generation ICT services. These services can help to improve supply chain foresight, limit the physical impacts of late deliveries, damage, shortages and accidents and reduce the financial impact of excessive costs and wasted scarce resources. They can also increase information visibility by eliminating system failures and creating information availability, and improve collaboration through increased communications and technology utilisation.

“Delivered using cloud, mobility, big data and SMART technologies, these next-generation ICT services are key to unlocking South Africa’s potential as a world-leading source, destination and enabler for goods, services, transport and logistics,” he concludes.